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The Automotive Industry in India

The Automotive Industry in India

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Published by Swati Sahu

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Published by: Swati Sahu on Jun 21, 2012
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automotive industry in India
is one of the largest in the world and one of the fastestgrowing globally. India's passenger car and commercial vehicle manufacturing industry isthesixth largest in the world,with an annual production of more than 3.7 million units in 2010.
According to recent reports, India is set to overtakeBrazilto become the sixthlargest passenger vehicle producer in the world, growing 16-18 per cent to sell around threemillion units in the course of 2011-12.
In 2009, India emerged asAsia's fourth largest exporter of  passenger cars, behindJapan, South Korea, and Thailand.
 In 2010, Indiareached asAsia's third largest exporter of  passenger cars, behindJapanand South Korea   beating Thailand. As of 2010, India is home to 40 million passenger vehicles. More than 3.7 millionautomotive vehicles were produced in India in 2010 (an increase of 33.9%), making thecountry the second fastest growing automobile market in the world.
HistoryThe first car ran on India's roads in 1897. Until the 1930s, cars were imported directly, butin very small numbers.Embryonic automotive industry emerged inIndiain the 1940s. Mahindra & Mahindrawas established by two brothers as a trading company in 1945, and began assembly of Jeep CJ-3A utility vehicles under  license fromWillys.
The company soon branched out into themanufacture of  light commercial vehicles(LCVs) and agriculturaltractors.
Following the independence,in 1947, theGovernment of Indiaand the private sector   launched efforts to create an automotive component manufacturing industry to supply tothe automobile industry. However, the growth was relatively slow in the 1950s and 1960sdue tonationalisation and the license rajwhich hampered the Indian private sector. After  1970, the automotive industry started to grow, but the growth was mainly driven bytractors, commercial vehicles and scooters. Cars were still a major luxury. Japanesemanufacturers entered the Indian market ultimately leading to the establishment of  MarutiUdyog. A number of foreign firms initiated joint ventures with Indian companies.
In the 1980s, a number of Japanese manufacturers launched joint-ventures for buildingmotorcyclesand light commercial-vehicles. It was at this time that the Indian governmentchoseSuzukifor its joint-venture to manufacture small cars. Following the economic liberalisationin 1991 and the gradual weakening of the license raj, a number of Indian andmulti-national car companies launched operations. Since then, automotive component andautomobile manufacturing growth has accelerated to meet domestic and export demands.
Following economic liberalization in Indiain 1991, the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxedrestrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki  andMahindra and Mahindra,expanded their domestic and international operations. India's robust economic growth led to the further expansion of its domestic automobile market which has attracted significantIndia-specific investment by multinationalautomobile
In February 2009, monthly sales of passenger cars in India exceeded100,000 units
and has since grown rapidly to a record monthly high of 182,992 units inOctober 2009.
From 2003 to 2010, car sales in India have progressed at a CAGR of 13.7%, and with only 10% of Indian households owning a car in 2009 (whereas this figurereaches 80% in Switzerland for example)
this progression is unlikely to stop in thecoming decade.
Congestion of Indian roads, more than market demand, will likely be thelimiting factor .
SIAMis the apex industry body representing all the vehicle manufacturers, home-grownand international, in India.
Starting its journey from the day when the first car rolled on the streets of Mumbai in 1898,the Indian automobile industry has demonstrated a phenomenal growth to this day. Today,the Indian automobile industry presents a galaxy of varieties and models meeting all possible expectations and globally established industry standards. Some of the leadingnames echoing in the Indian automobile industry include Maruti Suzuki, Tata Motors,Mahindra and Mahindra, Hyundai Motors, Hero Honda and Hindustan Motors in additionto a number of others.During the early stages of its development, Indian automobile industry heavily dependedon foreign technologies. However, over the years, the manufacturers in India have startedusing their own technology evolved in the native soil. The thriving market place in thecountry has attracted a number of automobile manufacturers including some of the reputedglobal leaders to set their foot in the soil looking forward to enhance their profile and prospects to new heights. Following a temporary setback on account of the globaleconomic recession, the Indian automobile market has once again picked up a remarkablemomentum witnessing a buoyant sale for the first time in its history in the month of September 2009.The automobile sector of India is the seventh largest in the world. In a year, the countrymanufactures about 2.6 million cars making up an identifiable chunk in the world’s annual production of about 73 million cars in a year. The country is the largest manufacturer of motorcycles and the fifth largest producer of commercial vehicles. Industry experts havevisualized an unbelievably huge increase in these figures over the immediate future. Thefigures published by the Asia Economic Institute indicate that the Indian automobile sector is set to emerge as the global leader by 2012. In the year 2009, India rose to be the fourthlargest exporter of automobiles following Japan, South Korea and Thailand. Experts statethat in the year 2050, India will top the car volumes of all the nations of the world withabout 611 million cars running on its roads.At present, about 75 percent of India’s automobile industry is made up by small cars, withthe figure ranking the nation on top of any other country on the globe. Over the next two or three years, the country is expecting the arrival of more than a dozen new brands makingcompact car models.
Recently, the automotive giants of India including General Motors (GM), Volkswagen,Honda, and Hyundai, have declared significant expansion plans. On account of its hugemarket potential, a very low base of car ownership in the country estimated at about 25 per 1,000 people, and a rapidly surging economy, the nation is firmly set on its way to becomean outsourcing platform for a number of global auto companies. Some of the upcomingcars in the India soil comprise Maruti A-Star (Suzuki), Maruti Splash (Suzuki), VW Upand VW Polo (Volkswagen), Bajaj small car (Bajai Auto), Jazz (Honda) and Cobalt, Aveo(GM) in addition to several others.
History of the Automobile industry in India
The economic liberalizationthat dawned in India in the year 1991 has succeeded in bringing about a sustained growthin the automotive production sector triggered by enhanced competitiveness and relaxedrestrictions prevailing in the Indian soil. A number of Indian automobile manufacturersincluding Tata Motors, Maruti Suzuki and Mahindra and Mahindra, have dramaticallyexpanded both their domestic and international operations. The country’s active economicgrowth has paved a solid road to the further expansion of its domestic automobile market.This segment has in fact invited a huge amount of India-specific investment by a number of multinational automobile manufacturers. As a significant milestone in its progress, themonthly sales of passenger cars in India exceeded 100,000 units in February 2009.The beginnings of automotive industry in India can be traced during 1940s. After thenation became independent in the year 1947, the Indian Government and the private sector launched their efforts to establish an automotive component manufacturing industry tomeet the needs of the automobile industry. The growth of this segment was however not soencouraging in the initial stage and through the 1950s and 1960s on account of nationalization combined with the license raj that was hampering the private sector in thecountry. However, the period that followed 1970s, witnessed a sizeable growth contributed by tractors, scooters and commercial vehicles. Even till those days, cars were something of a sort of a major luxury. Eventually, the country saw the entry of Japanese manufacturersestablishing Maruti Udyog. During the period that followed, several foreign basedcompanies started joint ventures with Indian companies.

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